Is the position of some people who say that the Happiness Index, which some countries are now

promoting, is a flawed measure of a society’s well-being defensible?

Whenever we think of ranking a nation’s development, we think GDP. Almost all of you must be
familiar with it, but I would like to give a brief refresher.

GDP or Gross Domestic Product is a monetary measure of the market value of all the final goods and
services produced annually. There are various approaches to calculating it like production approach
that tells about the value addition of the manufacturers, expenditure approach that tells how much
the country is spending on final goods and services, and income method that tells how much the
country and its citizens are earning.

As all of us have already completed the course on Financial Accounting, we have a basic idea of how
the book keeping is done in a corporation and the various ratios that tell if the entity is using its
inventory efficiently or if it is taking calculated risks or it’s repaying debts on time. Now suppose the
only indicator of success of the corporation was a number reached at by simply adding all its income
and subtracting all its expenses. Nobody would think that’s a very good indication.

Similarly, measuring the well being of society by the GDP of the country has limitations. While GDP
captures the income and expenditure, it does not capture leisure, health, a cleaner environment, the
possibilities created by new technology, or an increase in variety. For example, since 1970, the air
and water in the United States have generally been getting cleaner. New technologies have been
developed for entertainment, travel, information, and health. A much wider variety of basic
products like food and clothing is available today than several decades ago. But these factors are not
accounted in GDP. On the other hand, rates of crime, levels of traffic congestion, and inequality of
incomes are higher in the United States now than they were in the 1960s. Moreover, a substantial
number of services that used to be provided, primarily by women, in the nonmarket economy are
now part of the market economy that is counted by GDP. By ignoring these factors, GDP would tend
to overstate the true rise in the standard of living and welfare of society.

So, what are the factors that you can think of including to measure the true growth and welfare of a
society? Healthcare, Education, Time Use, Psychological well-being, Community Vitality, Good
governance? There are 9 such domains, all weighed equally, that are accounted for while calculating
the Gross National Happiness of a country. Each domain has around 4 underlying variables, which
are given different weightage depending on the objectivity and reliability of measurement of the
factors. So how do you reach to a definite number? The common answer will be an average of all the
domains. But as statisticians say, “When your head is in the oven and your feet in the freezer, your
average temperature is normal.” In happiness averages don’t count. So, sufficiency targets are set.
For example, ‘Six years education’ for the indicator ‘Schooling’ under the domain ‘Education.’

Sufficiency in 77%-100% of the 9 domains indicates deeply happy, Sufficiency in 66%-76% of the 9
domains indicates extensively happy and so on. Moreover, it’s the trend in the domains and not the
headline figure that matters and helps in policy making.

Although the objectivity and reliability of the indicators are still debatable, Gross National Happiness
is a step in the right direction in assessing the overall wellbeing of the nation. In the words of famous
American environmentalist, entrepreneur, author, activist, Paul Hawken – “At present, we are
stealing the future, selling it in the present, and calling it GDP.” GNH is more inclusive, holistic,
flexible and sustainable, and Bhutan has already taken the lead in researching the concept further
and building policies based on the trends in the domains.